>> john boehnor became speaker of the house with help from whacky tea partiers like michele bachmann and sarah palin and with help from rupert murdoch's corrupt media empire. i wonder why he's having such a tough time governing. >> if each side wants 100%, then we can't get anything done. >> the president goes big, republicans go backwards. >> i have bent over backwards to work with the republicans. >> the one thing he won't accept is a short-term solution. >> boehnor's people and republicans on capitol hill say they are ready to eat the peas, but the peas can't have flavor of tax increases. >> speaker boehnor is caught between the tea party and catastrophe. >> he basically caved in on saturday night after pressure from eric cantor. >> he has the power in the house. >> what can you tell me about

the relationship between speaker boehnor and eric cantor? >> senator dick durbin joins me. >> john boehnor is along for the ride. >> not all republicans believe the united states will default. >> i will be voting no on increasing the debt ceiling. >> these are ignorant people feeding lies to their constituents. >> dr. evil only asked for $1 million. >> tax pledges aren't the only problem for the republican candidates. >> did two republican hopefuls really sign a pledge suggesting a return to the days of slavery? >> the marriage vow. >> back tracking from controversial pledges of their own. >> michele bachmann and former senator rick santorum have signed that pledge. >> america is also in need of some tough love. >> would you sign this pledge? >> well, the answer is yes. >> a portion of it suggested that african-american children were better off as slaves. >> together we can take our country back again.

>> sarah palin telling "news week" magazine that she thinks she can win the presidential election. >> the cover should have said i'm still here. >> and the news for sarah palin's boss gets worse. >> the "news of the world." the uk hacking scandal continues to widen. >> this is a violation of the law, this hacking scandal. >> the anger against his company is so great at this point. >> this is their watergate moment. >> good evening from new york. so now the democratic president wants bigger spending cuts than the republican speaker of the house. how could it possibly have come to this with a president who began the year with no plans to cut spending in order to raise the debt ceiling? what you are now witnessing is the most masterful rope-a-dope ever performed by a president against an opposition party in congress. it began months ago with the president's repeated insistence on what prior to this year was

always taken as a basic fact of american governance, the debt ceiling must be raised, there is no choice, it must be made. the president has to make the choice in front of republicans that don't take any word seriously and think every word spoken by a democrat is a lie and provided the winning margin to make john boehnor on speaker of the house. once john boehnor's rise to the speakership was ensured, it was easy to see this day coming. >> our debt ceiling is now 14.3 trillion dollars. it will need to be raised in the coming coming year. this, by the way is boehnor's challenge, he must, and he knows it, pass an increase in his house of representatives. >> that night some members of the political media and all members of the tea party had no

idea what the debt ceiling is, because in the past, the debt ceiling increases have been routine. but john boehnor who had voted for debt ceiling increases knew exactly what i was talking about, and knew that night that this would be his biggest challenge as speaker. boehnor has been politically forced to speak out of many sides of his mouth during the debt ceiling saga. for the purposes of pandering@tea party, he referred to the date when the debt ceiling absolutely must be raised as "an artificial deadline." knowing full well there was for the purposes of pandering@tea party, he referred to the date when the debt ceiling absolutely must be raised as "an artificial deadline." knowing full well there was absolutely nothing artificial about it. boehnor had to say such things to placate the most ill-informed and crazy members of his republican caucus in the house, who only months ago were forming sentences with the phrase debt ceiling for the very first time in their lives. but boehnor also always knew even on election night, that the debt ceiling must be raised.

and that, thanks to the artful pressures applied by president obama, is now finally the boehnor position. >> we're up against the debt limit, and while some think, you know, we can go past august the 2nd, i frankly think it puts us in an awful lot of jeopardy and puts our economy in jeopardy, risking even more jobs. i agree with the president that the national debt limit must be raised. >> boehnor earned the right to say that, that we must raise the debt ceiling unmolested by members of his own party only after months of pandering to the know nothing section of his party that needed to feel that he was listening to their crazy ideas of maybe not raising the debt ceiling. boehnor has managed his party support by insisting the debt ceiling could only be raised with accompanying legislation that could cut spending, the

most massive cut in spending in the history of the federal government. in the meantime, while boehnor was struggling with the realities of governing versus the delusions of the tea party, president obama was day-by-day changing his negotiating position and changing it dramatically. in the middle of april, the white house position was that there did not need to be any accompanying legislation involving spending cuts or anything else in order to raise the debt ceiling. the obama administration wanted what they call a "clean bill," a simple, one-sentence bill that changes the number in the statutory debt ceiling. all you need is one sentence and pass that bill. the white house's original position to congress was the standard white house position on the debt ceiling, just shut up and raise it.

and that is what congress has actually always done. joe biden then led negotiations with house republicans on how to find a compromise position on the white house position of doing nothing but raising the debt ceiling and the republican's position of cutting $4 trillion in spending while raising the debt ceiling. biden and senate democrats rope-a-doped the republicans into weeks, weeks of discussions of trillions of dollars in spending cuts. in those discussions, e democrats appeared increasingly willing to go along with trillions in spending cuts, possibly as much as $3 trillion. then biden and the president insisted that there be at least a trillion in tax revenue increases and republican eric cantor fell for the obama ultimatum and walked out of the talks, doing exactly what the president wanted him to do,

because cantor was thereby proving to the country once again that president obama was willing to be much more flexible in his negotiations than republicans were willing to be with the president. now specific policy issues aside, president obama has already won the public contest of who appears to be more reasonable, and he won that weeks ago, and the republicans know that. then the president was armed to play much tougher on his inside game in the room, in the white house, face-to-face, eyeball eyeball-to-eyeball with john boehnor. the president made it clear he's serious about the tax revenue he will not sign a debt reduction package that does not include one-fourth of the tax savings that comes from revenue. the president has convinced boehner that's the only way they'll get a debt reduction package, the big target boehnor set weeks ago, so it's boehnor

who is now giving up on the big package and saying maybe we should only try to get $2 trillion in deficit reduction. maybe the deficit crisis isn't so bad. now the harder president obama pushes for the $4 trillion package, the more boehnor retreats from it. the president is finally capitalizing on a phenomenon that's been obvious from the start of his presidency, if he's in favor of something, the republicans are opposed. simple as that. here's the president embracing the republican's number, so now the republicans must be against their own number. this, this is a work of strategic brilliance by the president. the president's negotiating position, and it's only a negotiating position now is three-fold. one, he wants a big deal, $4 trillion in budget deficit reduction.

the second point, any deficit reduction package must include tax revenue increases, and third, the debt ceiling increase must be large enough to push our debt crisis forward to at least 2013 before we need the next increase in the debt ceiling. that, of course, is after, after the presidential election. the president made it clear today which one of those three negotiating positions is most important to him. >> i'm happy to consider all options, all alternatives that they are looking at. the things that i will not consider are a 30-day or a 60-day or a 90-day or a 180-day temporary stopgap resolution to this problem. this is the united states of america, and, you know, we don't manage our affairs in three-month increments.

we don't risk u.s. default on our obligations because we can't put politics aside. i will not sign a 30-day or a 60-day or a 90-day extension. that is just not an acceptable approach, and if we think it's going to be hard -- if we think it's hard now, imagine how these guys are going to be thinking six months from now in the middle of election season when they are all up. it's not going to get easier. it's going to get harder, so we might as well do it now. pull off the band aid, eat our peas. you know, now's the time to do it. if not now, when? >> okay. so the only, the only non- non-negotiable item is the time the debt ceiling increases.

he wants it over this summer. he does not want to go into a presidential campaign with the debt ceiling argument still raging. that is the most important and the only non-negotiable item of the president's negotiating position. he is obviously willing to negotiate on the deficit reduction package, including all the way to the position of negotiating away completely. since he started off with a negotiating position of not needing to do any deficit reduction while raising the debt ceiling. and he's obviously willing to negotiate other internal items within the spending cuts package. what he seems close to achieving, if he hasn't already, is convincing john boehnor that he absolutely will not agree to a deficit reduction package that does not include tax revenue increases. boehnor has repeatedly stressed that it is impossible, it's impossible for him to agree to a

deficit reduction package that does not include tax revenue increases, because it doesn't have the votes for it. here he is today. >> but the american people will not accept and the house cannot pass a bill that raises taxes on job creators. the house can only pass a debt limit bill that includes spending cuts larger than the hike in the debt limit, as well as real restraints on future spending. >> so, if the president can't agree to a bill that doesn't include tax revenue increases and boehnor can't agree to a bill that does, that leaves them only agreeing that the debt ceiling must be raised. and since the president has successfully and accurately portrayed a failure to raise the debt ceiling as the result of nothing but unreasonable republican intransigents, boehnor has to consider the devastating cost his party would be blamed for the economic

catastrophe that would strike this country if the treasury fails to meet its debts. but as we enter the final act of this drama, the game gets trickier every day. now, the man who has done more to warn the country against the perils of default, today is saying this. >> i will not sign a 30-day or a 60-day or a 90-day extension. >> the president has to be careful not to get boxed into saying that publicly, because after months of preaching the importance of raising the debt ceiling, he cannot get caught saying there's a version that he will not sign. of course, if on august 1st, with default looming on august 2nd, the congress passes a 30-day extension of the debt ceiling, a clean bill, with nothing else on it, despite what the president says today, of

course, he will sign that bill. what you will continue to hear from the president as the negotiations drag on is this. >> i'm prepared to take on significant heat from my party to get something done. and i expect the other side should be willing to do the same thing if they mean what they say, that this is important. >> the more he says he is willing to go against his own party, the more reasonable the president sounds to independents and swing voters, and he's saying he's willing to go against his own party on a spending cut package that the republicans are already retreating from, a spending cut package that he may never have to go against his party on, but he's getting credit for sounding reasonable, which is the most important thing for him at this stage publicly in the negotiations. and with republicans refusing to say anything like that, with republicans refusing to even consider an adjustment in the tax break for private jets,

symbolic though that may be, the more relentlessly unreasonable the republicans sound. the only way for the president to win the debt ceiling duel is to convince boehnor that the republican party could be blamed for the calamity that strikes if the debt ceiling is not raised, and that the president is not bluffing when he says he really does want $4 trillion in deficit reduction, which includes tax revenue increases, and that he's not bluffing when he says he will not sign a short-term extension of the debt ceiling. as of tonight, the bluffer in chief is winning. coming up, inside the room on the debt negotiations, senator dick durbin of illinois, one of the so-called elite eight in the negotiations joins me with the latest. and later, michele bachmann

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debt ceiling and deficit reduction negotiations are set to resume tomorrow at the white house after today's harry reid's office issued the kind of statement that indicates the parties are not exactly moving closer together. republicans are insisting on cutting senior's benefits instead of closing give aways to billionaires and corporate jet owners. they want to cut medicare without cutting special interest tax give-a-ways. a source telling nbc news that eric cantor dominated the discussion on the republican side while john boehnor spoke only once to agree with cantor. my guest was at the white house talks today.

joining me now, assistant majority leader, senator dick durbin of illinois. thank you very much for joining me tonight, senator. >> good to be with you. >> senator, you were in the meeting this afternoon, i know you were sworn to secrecy, but come on, it's just us talking here. >> i'll be free to spill my guts. >> you always do come out of it with a feeling of how close are we. how close are we to a finish line, how does it feel, does it feel deadlocked. what was your feeling walking out of the room today? >> well, at least we understand one another better, but we're not close to an agreement. the president made it clear, though, this is his second night in the row that we've met -- or second day in a row. he said we're going so meet every single day until we get it done. he's determined, personally invested in it, and really putting us all in the task we cannot let the economy slip even further by failing to extend the debt limit.

>> seems the president is winning the basic argument i never thought we'd have to have is do we really have to raise the debt ceiling. you hear john boehnor saying yes, i get it, i know, we really do have to do it. is that the feeling in the room? >> yes, and the good news is the craziness you're hearing out of the iowa caucuses on the other side is not being repeets ated in the room. the people there are grownups, we know what's going to happen. our credit rating, if you will, in the world will be in question, interest rates will go up. i can't think of a worse thing to happen to the economy. that's a job killer. everybody at the table knows that. >> given the message which i think the democrats and republicans have given successfully, the importance of raising the debt limit. i don't mean the importance of the masses, many people don't think it's necessary. i think that has to do with how the polling question is asked. but here we have the president

today saying i will not sign certain versions of a debt ceiling increase. how can he take the position that there's a debt ceiling increase that would pass the senate and house of representatives and come to his desk and he would just stare at it and not sign it? >> i think he understands the impact if we start limping around month to month or every two or three months extending the debt ceiling what that does to our economy in the eyes of the world. we are serious about our debt and our future. the president is saying let's get serious. that's why he went to john boehnor personally and said we need a big deal, something that is honest and decisive and tells the rest of the world we're tackling our problems head-on. john boehnor came back sorry, i can't sell it. but the president has made it clear, don't send me this six week, six month, whatever it is, because i'm not going to put the united states of america economy through that.

>> seems to me the president has been brilliant in getting john boehnor to say first that he couldn't sell a $4 trillion deal that included tax revenue increases to his caucus, when in fact, it may be president obama could not sell the same deal to democrats that might be necessary to vote for it in the house of representatives or democrats in the senate. >> make no mistake, it would be difficult. when you put entitlements on the table, a lot of democrats say we're out of here, we're not going to talk about it. i understand that, it's painful. you have to show what you're doing with these entitlement programs is you're buying them solvency and life blood. medicare is going to run out of money in a few years, social security, the strongest program we have on the books, has 25 years of solvency, then runs into problems. if we deal with those issues honestly and put them in the strengthening medicare and

social security, i think democrats would be more open to the conversation. >> senator, the debt ceiling votes have almost been almost ignore able in the congress, so much so, they were not aware of it, go by unnoticed. there was a debt ceiling vote in the bush administration where you voted against raising the debt ceiling. is that a vote the president today wishes he could get back when he's sitting in the room insisting on the importance of raising a debt ceiling when he had his one choice to vote on it in the senate and he voted against it? >> he said that. i can tell you what happens. i think you know this, you worked up on the hill here. if you're not in the president's party, you say it's the president's responsibility to do it, then look over your shoulder to make sure it passes. you don't want to go home and explain it if you don't have to, but you don't want to see the united states default on its debts. it's not pretty, but we know the bottom line, it has to pass.

>> yeah, what each party always makes sure of is there's no more than 49 votes against it in the senate, and they kind of know it's going to work that way. it's always been done in the senate in a fairly cordial way. this new world, members of the house and possibly new members of the senate that actually don't believe it has to be raised seems has cost you months in this debate, just getting them to the point or getting boehnor to the point where he can say publicly he knows it has to be raised. >> you're right about that, and i'll tell you some of the theories they have on why we don't have to extend the debt ceiling is ludicrous. if we don't do this in the month of august we'll have $172 billion to spend and we'll need $306 billion. the government will have to make a choice, social security recipients, federal employees, combat soldiers. i don't want to make that choice and we shouldn't have to. plus, in august we'd have to borrow more money.

what do you think we'll have to pay in interest if we're not credible in making payments? >> assistant majority leader, dick durbin of illinois, thank you very much for joining me tonight. looks like you have a lot of late nights coming up. >> good to be with you. >> thank you, senator. coming up, michele bachmann is now backing away from a pledge that's too crazy even for her, but that's after she signed it. and potential fcc trouble for rupert murdoch as suspicions over the hacking scandal spread to the united states. and when it does, men with erectile dysfunction can be more confident in their ability to be ready with cialis for daily use. cialis for daily use is a clinically proven low-dose tablet you take every day so you can be ready anytime the moment's right. tell your doctor about your medical condition

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as predicted here, sarah palin still has not taken any actions that would lead anyone who knows anything about political campaigns to believe even for a second that she might run for president. her livelihood, though, requires that she continue to trick some reporters into imagining a fantasy world where sarah palin is an actual candidate for president. that's in tonight's rewrite. in the spotlight tonight, what is that? oh, we call it the bundler. let's say you need home and auto insurance.

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in the spotlight tonight, why it's good to read before you sign. last week, republican presidential candidates michele bachmann and rick santorum raced to be the first to commit to the latest campaign pledge, this one written by a right wing religious group in iowa called the marriage vow. it asked the candidates to pledge sexual explicitly with their spouses as well as fighting against same-sex

marriage, divorces, quickie divorces, all forms of pornography, and while they are at it, women in combat and sharia law. it tried to establish marriage is in crisis and needs to be defended. " "slavery had a disastrous impact, but a child born into slavery in 1960 was more likely to be raised by his mother and father in a two-parent household than was an african-american baby born after the election of the usa's first african-american president. after a media back lash, bachmann's campaign spokesman said she didn't read that part when she signed the vow and declared bachmann was like really, totally, wicked anti-slavery. in no uncertain terms,

congressman bachmann believes that slavery was horrible and economic enslavement is also horrible. she just can't bring herself to say slavery was horrible, period. the marriage vow writers decided to remove that paragraph from the preamble, issuing a statement. after careful deliberation and wise insight and input from valued colleagues, we deeply respect that we agree the statement referencing children born into slavery can be miscon trued, and such misconstruction can detract from the core message of the marriage vow that we must work to strengthen and support marriage and families between one woman and one man. we sincerely apologize for any negative feelings this has caused and have removed the language from the vow. joining me now is jonathan capehart, washington post editorial writer and nbc contributor.

so, jonathan, that's the latest lesson. do you get the feeling even if bachmann had read the whole thing, she still would have signed it. >> oh, yeah. she still would have signed it. there is one silver lining in that paragraph that you read, the wonderful statement on slavery, at least they are not birthers. they admit the president of the united states is indeed an american citizen. that's the one silver lining, but look, the paragraph wouldn't have gone in there if the person who wrote this or committee that root this bothered to watch "roots." anyone who watched "roots" or knew about american slavery would know they are under constant threat of pain, anguish, debt, you name it. the paragraph was a lame attempt, and the second

paragraph also, is a lame attempt trying to garner support, perhaps, from conservative african-american for whom homosexuality is a problem. >> michele bachmann signed it. she's now in the latest iowa poll sitting at the top, edging out mitt romney at the top of the poll indicating the kind of things that michele bachmann is interested in is what a very large number of iowa republicans are interested in, these crazy notions like we have to prevent sharia law. we don't want quickie divorces. i don't know what a quickie divorce is exactly -- >> me neither. >> these are presidential issues, quickie divorces, sharia law, women in combat. this is what you have to run on in iowa. >> yeah, because remember, social conservatives -- one, iowa is a caucus state. that's when your friends and neighbors, coworkers, all get together on a very cold night in front of all your friends and family and neighbors cast your vote for who you're going to vote for.

and iowa tends to favor the socially conservative candidates, which is why you don't see mitt romney from massachusetts or john huntsman from utah campaigning there. for someone like michele bachmann, this vow and these social conservative issues are a winner. we're seeing it in the polls. >> jonathan, as you know, we cannot leave the discussion of republican candidates without noting in that same poll, tim pawlenty inched up a couple of points in that poll. he's now tied with herman cain. the pawlenty steam roller is starting. coming up, lame stream media finally does right by sarah palin. "news week" puts her on the cover and fills the magazine with flattering photographs and a love letter to palin. "news week" gets tonight's rewrite.

the criminal tactics by rupert murdoch's newspapers have apparently reached all the way to a former british prime minister. that's ahead. and "news week" is promoting one of murdoch's tv performers as a presidential candidate. intros with our first color refresher. get healthy looking, ammonia-free color, then let the new refresher boost your healthy look 2 weeks in. it helps restore color pigments, so you can get a freshly colored look once again. natural instincts. it's all good. now get all the healthy looking color of natural instincts in our new vibrant shades.

time for tonight's rewrite. the once-noble "newsweek" and now the fastest sinking ship on the newsstand in a desperate attempt to boost sales of a $5 magazine that is 68 pages long, 17 and a half of which are advertising, has put this lie on its cover this week. sarah palin's lie, "i can win" goes uncontested in newsweek's lengthy, adoring profile. she's saying i can win, which he came more insistent about when he ended his fake presidential campaign. "newsweek" allows palin to say "i do believe i can win without discomforting her in any way by referring to the polls that show she's the most unpopular politician in america. nor does "newsweek" think it's helpful to know that she is the

most unpopular politician in alaska with only 39% approval rating. palin has seen those polls. she is smart enough a politician to know that the polls indicate she could not even win the republican nomination for presidency, nevermind the presidency. so she knows she's lying when she says i can win. but the only palin poll that the newsweek article refers to is the 80% approval she had in alaska before john mccain chose her as his running mate. in other words, before she actually became the national political performance artist now known as sarah palin. "newsweek" does everything it can to make the madness of sarah palin seem reasonable.

consider this paragraph explaining why palin did the unthinkable and quit her governorship into her term. palin tried to do something that hadn't been done for 20 years, return to the governor's chair after defeat on a national ticket. michael dukakis was the last to manage it in 1988. former democratic allies now treated her like the opposition and disaffected republicans were not inclined to come to the rescue. political opponents bombarded her with ethics complaints and though all were dismissed or settled without finding wrong doing, palin lost her motivation to stay in the job and fight. it was like going to work every day in handcuffs, todd told me. okay, number one, she was not going to work every day in handcuffs. number two, democrats in alaska had no power to make governing impossible, since it is a republican state. and three, many more governors

have much more difficult relationships with their legislatures and do not quit. and finally, let's consider the first line of this defensive paragraph about palin quitting her governorship. after the 2008 election, palin tried to do something that hadn't been done in twenty years, return to the governor's chair after defeat on a national ticket. michael dukakis was the last to do it in 1988. when you say michael dukakis is the last to manage it, you imply it's impossible to manage it in the last 20 years. and palin, no other sitting governor has lost on a presidential ticket in that time period. so another way of writing that sentence is the last sitting governor to lose on a

presidential ticket had no problem managing the return to his governor's job. such is the pathetic pro-palin tilt that permeates this utterly absurdist piece. palin obviously negotiated and successfully demanded "newsweek"'s cover in order to cooperate with the magazine. newsweek said she's worthy of the cover because of her standing of a possible presidential candidate with presumed front runner potential. but as viewers of this program knows, sarah palin is never going to run for president or elective office. she has discovered the joys of the responsibility-free celebrity and millions of income that are hers through deft management of ta celebrity. surely some at newsweek are smart enough to know this and may have decided to go with the palin cover because with michele bachmann soaring in the polls,

they are days away from the utter irrelevance of sarah palin. as to why newsweek gave her the softest treatment the mainstream media ever has, the answer lies at the end of the article where newsweek inadvertently confesses to the deal it obviously made to palin for the cover, the flattering photography, and the puff piece. the mainstream press is becoming less and less relevant, she said, adding that she would have no hesitation in shunning media outlets she does not trust. i would say no to those who have lied about me. there is no need to reward bad behavior. i've learned, you know, once bitten, twice shy, i have learned. there's newsweek telling you that she would have no

hesitation in shunning media outlets she does not trust. that means newsweek had to make promises to her to get her trust. i have specifically avoided mention of the author of the newsweek piece because he has done good work in the past and he surely will again and should not be known for this love letter to sarah palin. we've all done things for money. this week, it was his turn. sweeking of the money, it turns out that this week's newsweek is for once worth every penny of the $5 it costs at the newsstand because of carl bernstein's masterful article, "murdoch's watergate." [ diane lane ] is your anti-wrinkle cream gone...

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i've always said i've tried to write articles in a truthful way, and, you know, what better source of getting the truth is to listen to someone's messages. >> you're not uncovering corruption or bringing down institutions corrupt. you're trying to find out who's sleeping with who. it's about selling newspapers. >> if you have a free press and a decent democracy. >> you want nothing to do with a free press or decent democracy. >> more damaging details are emerging in rupert murdoch's phone hacking scandal. for the first time, other news corp. properties are being implemented. guardian newspaper is reporting

hackers working on murdoch's sunday times and the sun's newspaper targeted gordon brown's voice mail as well as his bank, medical, and legal records. joining me now, martin bashir. this is tonight's story i know nothing about. i was out of the country all next week, i was in malawi in africa. take me through this, what is the latest in it and what is the most damaging elements as we sit here tonight? >> basically what emerged was in 2004, prince william, who's recently been in the united states had a knee injury, and he had a phone conversation with a doctor that nobody else knew about, and it suddenly emerged that the story about his knee injury was in the "news of the world" newspaper. so the press office at buckingham palace made a complaint. that was the start of an investigation that continued and continued that over the last

week revealed they hacked over 4,000 people's private voice mails on phones, home phones, and mobile phones. this included everybody from members of the royal family to the prime minister of the united kingdom to a young girl, 13 years old, who disappeared. they hacked her phone and listened to cries of appeal from her parents, and then when the phone messages were full, they would delete the messages, and this led the police to believe that the young lady was alive and eventually they found her dead body. it's also emerged that news of the world journalists hacked the phones of parents of deceased members of the armed forces in the united kingdom who were killed in afghanistan and iraq. >> what were they hoping to find in hacking those calls? >> obviously, they were looking for information about families, they were looking for details

about millie, did she disappear, was she with a boyfriend somewhere, so they had access. >> the number of people that had to be involved in this exercise has to be big. >> no. 2007, the managing director of "news of the world," now the director of "the wall street journal" went before a committee and said there was one rogue reporter at "news of the world." it's now emerged it was rife throughout the paper that virtually everybody involved was hacking someone's phone for stories, and that's why rupert murdoch took the decision at the weekend to close that newspaper for good. that's a newspaper that's existed for 168 years. no more. >> and the law on this in britain? >> oh, it's a criminal offense. but what's worse is it's now emerged that they had fiscal financial relationships with serving police officers, so, for

example, one individual, a member of parliament was discovered to be meeting men at a particular place in south london near where i used to live, but what happened was he would be arrested by a police officer and within five minutes a "news of the world" journalist and photographer was on site. >> what is the jeopardy for murdoch at this stage personally? >> today, his shares lost about $3 billion. >> if he can found to have known about any of this -- because owners of these newspapers, when they read them and see gold in there, they call up and say hey, how did you get that? >> he has said he knew absolutely nothing about any of this. if it's possible that he or his son, james murdoch, knew and were involved -- and remember, james murdoch was asked by a house of commons committee about whether he knew and he said he didn't -- if they did, that places them in very serious jeopardy, in fact, perjury. >> martin bashir, thank you for bringing me to light on the